This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
Receive this weekly newsletter keeping 45k+ investors in the loop
1. Steno Signals #95 – Is the Next Move a Hike?
- Before getting to the financial word, I just briefly want to reiterate that we find a de-escalation most likely between Iran and Israel after the events unfolding over the weekend.
- Our head of geopolitics, Mikkel Rosenvold, released his take earlier.
- Quote of the week: Iran’s Chief of Staff: “Our attack is over, and we do not wish to continue it, but we will respond forcefully if Israel targets our interests.
2. The week at a glance: Soft CPI in UK and a BIG positive surprise from China?
- Happy Monday and welcome to our short and sweet coverage of the data calendar for the week ahead.
- We try to map the events with market moving potential and exploit weaknesses or skews in the economic consensus around them.
- This week we see strong upside to US retail sales, Chinese GDP, while soft downside to the UK CPI figures.
3. Positioning Watch – Volatility Is Back, but Markets Still Lean into USD Duration.. God Knows Why..
- Hi everyone, and welcome back to our weekly positioning / sentiment overview, which will be delivered to you right as firefighters have hopefully put out the fire at the old exchange building in Copenhagen..
- Markets have started the week off where they left last week, with the USD wrecking ball continuing to prevail, posing headwinds for equity and fixed income markets as Fed pricing has more or less turned upside down lately.
- We generally positioned for this repricing of USD fixed income, but were caught wrongfooted in a few trades along the way admittedly.
4. The Rally in Gold: Clear as Day
- The massive rally in the price of gold coincided with Fed Governor Waller’s speech, in which he stated that he believes the Federal Reserve should buy more T-bills.
- Many market pundits argue that changing narratives explain historical gold rallies.
- But digging a bit deeper reveals that, especially since the Great Financial Crisis, the narrative behind gold’s strong performance has been the same and getting stronger.
5. Chinese Data Continues to Improve Incrementally
- Qingming holiday sending surpasses 2019 levels on an absolute and per capita basis
- A further relaxation of housing measures spurs increased mortgage demand
- Two steps forward, one step back -typical signs of a bottoming-out economy.
6. The Liquidity ‘Air Pocket’: A Short Update After US Tax Filing-Week
- Global Liquidity has been the key factor driving risk assets higher. It faces a short-term air pocket that investors need to understand
- Three factors are dragging Global Liquidity — the US Fed, the PBoC and the rising MOVE Index
- Most important near-term, the US money market liquidity has suffered a major hit this week following the April 15th Tax-filing deadline. Next up the QFA at month-end
7. Here Comes the Sentiment Flush
- The S&P 500 violated an uptrend that began in November. The violation resolved with the index is testing initial support nearby at the 50 dma at about 5110.
- Our analysis of market internals concludes that the decline is nearly done. Sentiment is not sufficiently panicked to be contrarian bullish. Technical conditions are oversold but can become more oversold.
- We interpret these conditions as a stock market that’s undergoing final flush before an intermediate-term bottom is formed. We believe any pullback should be temporary and shallow in nature.
8. Hedging Risk Amidst the Escalating Israel-Iran Conflict
- Tensions between Israel and Iran have escalated, potentially leading to a broader conflict involving major global powers, which could significantly impact global financial markets.
- Immediate market reactions could include a drop in global stock markets, a surge in oil prices, and increased demand for safe-haven assets like gold and the US dollar.
- Multi-Asset portfolio managers need to employ strategies such as reducing risky asset exposure, increasing investments in defensive sectors, and diversifying geographically to mitigate the conflict’s impact on investments.
9. Iran’s attack – Large in Size, Harmless in Effect. What’s next?
- Welcome to the weekly Great Game, which is obviously dedicated to the situation in the Middle East.
- We covered Saturday’s attack on Israel in our Debrief, so in this post, I’ll try and look a bit ahead and give our take on what may lie ahead – both in the Israel/Iran conflict, but perhaps even more importantly in the Red Sea deadlock.
- Understanding Iran’s strikeSituation:On Saturday evening, Iran attacked Israel in response to the April 1st bombing of the Iranian embassy in Damascus.
10. Portfolio Watch: The USD Wrecking Ball Is Back
- The USD has been on a roll since the firm US inflation report earlier in the week and we are approaching the point where European trade balances will be impacted substantially by the rally in (energy) commodities.
- Even European Nat Gas seems to be on the move and pairing that move with the broader rise in Oil and Copper leads to a likely “flip” in the Eurozone trade balance.
- When the Euro-zone trade balance shifts from positive to negative, we typically see an impact on the trend of the EUR, which is probably the last thing the ECB needs right now.
